KP Reddy, founder of RCMS Group and former Vice President of BIM Services for American Reprographics Co (ARC), departs ARC to pursue new opportunity

I just learned about this, so consider this “breaking news”. KP’s last day at ARC was this past Friday. As I understand it, Dilo and Suri were very supportive of KP’s decision to pursue other opportunities.

The first time I met KP Reddy was right after he gave a presentation – about BIM – at the IRgA Convention held in Pittsburgh. Only several months later, KP sold RCMS Group to ARC. That transaction took place in September 2009.

New Year brings new direction for KP. I don’t yet know what new opportunity KP has decided to pursue, but I wish him the best of luck and success with whatever it is he’s decided to do. He’s definitely one of the smartest individuals I’ve ever had the pleasure of getting to know.

For those of you who are not aware of this, KP’s book – “BIM for Building Owners and Developers: Making a Business Case for Using BIM on Projects” - is now for sale on Amazon.com

The following information comes from KP Reddy’s profile on LinkedIn:

KP Reddy was most recently the Vice President of BIM Services for ARC (NYSE:ARP). ARC is the largest Global Construction Information Management Company in the World.

Formerly KP was Chief Executive Officer of RCMS Group. A nationally recognized expert on construction technologies, including Building Information Modeling (BIM), he is a sought-after speaker and industry advisor. 



Before founding RCMS Group, KP was Vice President of Operations and Chief Information Officer for Verso Technologies (NASDAQ). While at Verso, he was involved with nearly a dozen mergers and acquisitions of technology companies. 



Prior to Verso, KP served as Chief Technology Officer of Cereus Technology Partners (NASDAQ), which he founded in 1997, and acted as President and CEO until its acquisition in 1999. During his tenure at both Cereus and Verso, KP was deeply involved in technology projects which included software development and data management.

He began his career as a Project Engineer and Business Development Manager for Law Engineering and Environmental Services (now Mactec).



KP is a graduate of the Georgia Institute of Technology with a Bachelors of Science degree in Civil Engineering. He is an active Alumnus of the Georgia Institute of Technology, serves as a Mentor Member for The Indus Entrepreneur (TiE) Atlanta, is an advisory board member for Midtown Bank & Trust, AMPIRIX and serves on the board of directors for several privately held companies. KP also serves on the National Council of Architectural Registration Boards (NCARB) BIM Task Force and the NBIM Board of Direction.

American Reprographics Co (ARC) Investor Presentation – revised and updated, November 2011

Tomorrow, November 9, 2011, three members of ARC’s executive management team – Suri, Dilo, and John Toth – will be giving a presentation at the J.P. Morgan Ultimate Services Conference in New York City.

In conjunction with that event, ARC has just released a revised, updated “Investor Presentation”.

I’ve placed a copy of that presentation in my Google Docs library, and here’s a link you can click on to access the presentation file.

http://tinyurl.com/7vbguna

I have not yet read the presentation file, but will do so sometime later today.

American Reprographics (ARC) Q3 2011 Results - Joel's comments and further estimates

American Reprographics Co (ARC) released its Q3 2011 results last week on Tuesday, November 2^nd, 2011, after the market closed.

Prior to ARC releasing its Q3 2011 results, I issued a” guesstimate”, in a blog post, that ARC’s Q3 2011 sales would come in at $105.00 million.

A few days later, ARC reported its Q3 2011 results, and it’s “actual” sales revenues came in at $104.8 million.

So, my “guess” wasn’t far off. Chalk it up as a “lucky guess.”

Now, I’m going to “guesstimate” ARC’s sales for the Full-Year 2011, and, to do that, I also have to “guesstimate” ARC’s Q4 2011 sales.

For most reprographers who are heavily involved in providing services to the A/E/C industry, the last quarter of the calendar year is, sales-wise, usually the worst quarter of the year. ARC management typically points that out during earnings calls. ARC’s revenues from “reprographics services”, the latter being ARC’s primary revenue segment, have continued to trend down, and I don’t see anything yet that’s going to change that for this year’s 4^th quarter, inasmuch as the A/E/C industry (A/E work and Construction activity) has yet to show evidence of a rebound. ARC management did say, during the earnings call the other day, that ARC is experiencing significant growth in its MPS business, but ARC’s FM business, apparently, has not yet resumed growth, and ARC’s Riot Color business does not appear to have yet gained sufficient traction to offset declines in A/E/C plan and spec printing activity.

Based on all that, my “guesstimates” for ARC’s Q4 Sales and Full-Year 2011 Sales, respectively, are $99.0 mil and $$419.89 mil.

“Total” Sales by Quarter, 2010 and 2011, actuals and estimates:

Sales millions Q1 2010 $112.16 actual Q2 2010 $115.09 actual Q3 2010 $109.42 actual Q4 2010 $104.97 actual Year 2011 $441.64 actual Q1 2011 $106.50 actual Q2 2011 $109.59 actual Q3 2011 $104.80 actual Q4 2011 $ 99.00 Joel’s estimate Year 2011 $419.89 Joel’s estimate

And, if my guesstimate are close, then that would mean ARC would show a Sales decline of 5%, 2011 vs. 2010. Not bad, considering the fact that A/E/C industry activity is probably off close to 10%, 2011 vs. 2010.

Let’s take a closer look at ARC’s revenues from its “reprographics services” revenue segment, and, below, you’ll see that I’ve “guesstimated” ARC’s reprographics services sales for Q4 2011 and for the Full-Year 2011.

“Reprographics Services” Sales, year-over-year, actuals and estimates:

Year	Q4	Full-Year
2008	$108.9	$ 518.1	actuals
2009	$ 75.8	$ 350.5	actuals
2010	$ 67.1	$ 294.6	actuals
2011	$ 62.0	$ 289.4	Joel's estimates

If my “guesstimates” are close, then it will be apparent that ARC’s “reprographics services” sales pretty much bottomed-out during 2011. Personally, I expect to see an uptick in ARC’s reprographics services” sales in 2012, say in the range of 5-10% about 2011 numbers, as a result of increased A/E/C industry activity in 2012 and as a result of ARC’s Riot Color business finally gaining traction.

ARC’s Q3 2011 results must have pleased investors, for ARC’s stock price has gone up since it reported earnings, closing at $4.77 on Friday, November 7, 2011, two days after ARC reported its results. That’s probably due to investors believing that ARC’s prior revenue declines are pretty much over and done with (with the exception of Q4 2011) and that ARC is now poised for growth (in 2012 and later on), especially considering Suri’s comments about growth in ARC’s MPS business. ARC’s stock price closed at $3.17 on October 3^rd, 2011, only five weeks ago, and, since then, ARC’s stock price has increased an impressive 50%. Damn nice gain if you got in at, or near, that price.

One other comment: ARC did another write-down of (took another substantial charge against) its goodwill in Q3 2011. The faster ARC writes down its goodwill when it is in a bottoming-out, pre-recovery stage, the better ARC’s operating earnings will be once growth resumes. In the short-term, investors are apparently unconcerned about ARC’s substantial goodwill write-offs (since that’s a non-cash expense), but I suspect they will be pleased by the affects of that as, in forward years, there will be lower “normal” charges for amortization of goodwill, which will have a positive affect on EPS.

As I mentioned in one of the posts I did about the Eastern (Regional) Reprographics Association convention, Suri spoke about ARC’s strategy, going forward, and he was very, very pumped up about ARC’s opportunities to grow its businesses – MPS. FM, Color and Technology.

Stadium Capital continues building its position in ARC shares (information updated through Oct 17, 2011)

On October 1^st, 2011, I posted a fairly detailed (long-winded) note on this blog about Stadium Capital’s continuing purchases of shares in ARC. Today’s post won’t be as detailed as the last post. All I’m going to do today is provide an update on additional shares purchased since the last update.

Stadium Capital continues building its position in American Reprographics Co (ARC) shares (information updated for purchases through October 17, 2011)

Since August 23, 2011, which was when Stadium Capital first filed SEC Forms 3 and 4 to indicate it had become a 10% or more holder of ARC shares, Stadium Capital has purchased, through October 17^th, 2011, an additional 512,225 shares, bringing its total share ownership to 5,158,546 shares, which figure represents approximately 11.16% of ARC’s total outstanding shares. Stadium Capital paid $1,865,572.00 for these 5,158,546 additional shares.

Stadium Capital’s average cost per share, for ARC shares purchased from August 23^rd through October 17th, works out to $3.64 per share. The closing price of ARC shares on October 20th, 2011 was $3.79 per share.

Recent Form 4 filings with the SEC reveal these purchases – from August 23^rd, 2011 through October 17^th, 2011.

Transaction Date	Purchase Price	# of Shares Purchased	# of shares owned, after purchase	%age of O/S Stock Owned
8/23/11	$3.79	30,600	4,676,921	10.12%
8/24/11	$3.88	17,991	4,694,912	10.16%
8/25/11	$3.80	244,000	4,938,912	10.69%
9/2/11	$3.54	29,315	4,968,227	10.75%
9/6/11	$3.45	1,833	4,970,060	10.75%
9/8/11	$3.57	6,591	4,976,651	10.77%
9/9/11	$3.49	11,641	4,988,292	10.79%
9/12/11	$3.54	17,256	5,005,548	10.83%
9/20/11	$3.56	13,737	5,019,285	10.86%
9/21/11	$3.50	9,170	5,028,455	10.88%
9/26/11	$3.47	5,500	5,033,955	10.89%
9/28/11	$3.33	27,524	5,061,479	10.95%
9/29/11	$3.29	22,203	5,083,682	11.00%
9/30/11	$3.35	41,019	5,124,701	11.09%
10/3/11	$3.20	18,348	5,143,049	11.13%
10/17/11	$3.64	15,497	5,158,546	11.16%